Weekly River Finds #3
Some interesting finds ranging from articles, podcasts or videos for your reading pleasure
(1) The Benefits And Perils Of EBITDA by Vince Martin
EBITDA can be useful for certain industries and business profiles. For example, in REITs or casinos, the cost of constructing the building or casino will be depreciated to zero after a certain number of years. However, in reality, assuming proper maintenance spending, the building is likely to be worth more than zero. In this instance, EBITDA may provide a more accurate reflection of the business’ cash flow
EBITDA and adjusted EBITDA can be used to make a business look better than it is. For example, we should not ignore stock-based compensation in tech companies as it is a very real expense
Be flexible but skeptical on the disclosure of EBITDA and adjusted EBITDA - is management trying to provide more information or artificially make the business look better?
(2) Attenuating Innovation (AI) by Ben Thompson
The recipe for genuine innovation includes (i) embracing uncertainty and the fact that one doesn’t know what the future holds; (ii) understand people are inventing technologies and use cases constantly; and (iii) the art comes in editing after the invention, not before
“The point is this: if you accept the premise that regulation locks in incumbents, then it sure is notable that the early AI winners seem the most invested in generating alarm in Washington, D.C. about AI. This despite the fact that their concern is apparently not sufficiently high to, you know, stop their work. No, they are the responsible ones, the ones who care enough to call for regulation; all the better if concerns about imagined harms kneecap inevitable competitors.”
“In short, this Executive Order is a lot like Gates’ approach to mobile: rooted in the past, yet arrogant about an unknowable future; proscriptive instead of adaptive; and, worst of all, trivially influenced by motivated reasoning best understood as some of the most cynical attempts at regulatory capture the tech industry has ever seen.”
(3) A Few Laws of Getting Rich by Morgan Housel
Money has a limited role in happiness; the primary role in happiness is likely to be in health, family, friendship, and being part of something bigger than yourself
Quick wealth is fragile wealth; spending fast money is easier because the emotional cost of spending is low. Contrast this with a slow build up of wealth over decades; the emotional cost of spending that would be much higher
Manage expectations as your income grows because wealth and luxury is relative. Choose who you compare your wealth to carefully; everything good in life is just the gap between expectations and reality
Disclaimer: Please note that none of the information provided constitutes financial, investment, or other professional advice. It is only intended for educational purposes.